Copper - Monthly (Log) - The 8/16 Year Cycle

One of the interesting things about commodities is their adherence to time cycles, meaning they tend to cyclically bottom in a periodic way. The most common cycles are 8 or 9 year cycles which are evident in several different commodities. Indeed, theres good analysis that suggests a 16-18 year cycle for Real Estate. So, its worth noting that Copper also exhibits some cyclicality. Notice the way it tends reach cyclical lows every 8 years. It also appears that there is a more pronounced 16 year cycle. Time Cycle analysis does NOT call the tops of cycles--its only good for giving ideas about bottoming periods. It looks like we wont get our next major bottom (buying opportunity) until Late 2017. Both the smaller and larger degree cycles will be pointing downward after 2013, so expect hard deflationary forces on Copper from 2013 to 2017. Between now and 2013, though, copper is in a bit of a no mans land in terms of cycle analysis.

REPRINTED from 5/8/2011

Fall/1977

Fall/1985

Fall/1993

Fall/2001

Fall/2009

Andys Technical Commentary__________________________________________________________________________________________________

Copper - Weekly (Non-Log)

One of the things about longer term Commodities Charts is that theyre a series of corrections, or ABC patterns. It makes them much different than the Stock Market, which can grow. Commodities tend to just correct from one emotional extreme to another. Copper has taken some body blows recently and is now slipping below psychological support at $4.00. One of the reasons its difficult for me to get bearish, though, is the look of the move up from 2008/9 lows. I can only see three waves up. So, my bias to label this current decline as part of a Wave 4 which must hold above $3.47. (C) The bad news for Copper bulls is that the Wave 1 was extended, which means that the 5 3 Wave 5 will be the smallest leg, so only a marginally higher high Copper.

(A)
a b

1 4

a b

REPRINTED from 5/8/2011

c

(B)

Andys Technical Commentary__________________________________________________________________________________________________

Copper - Weekly (Non-Log)

One of the things that was pointed out back in early May was that the final fifth wave of this move would be the smallest and would only result in a marginally higher high. Theres a strong probability that we have witnessed a failed fifth wave, a truncated wave that cannot exceed the height of the third wave. If thats what is transpiring here, then its horribly bearish longer term. At this point the best a bull can hope for is that someday, sooner rather than much later, the gap between $3.86 and $3.91 gets filled, which would be a GREAT time to Sell copper.

(C)
5

(A)

Gap = $3.86-$3.91

2 a
The 16 year Cycle (from first slide) points downward until 2017. With the 8 year still pointing up until 2013, the cycles were in a no mans land. This Copper Story could well be over and wont be a long term buy again until 2017.

(B)

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Copper - Weekly (Non-Log)

In technical wave parlance, this pattern is a TERMINAL Wave (C) with a First Wave Extension. In a terminal pattern, the waves are all corrections and it will share similar characteristics to a Triangle. A first wave extension is the most common form of a Terminal (Elliott called them Diagonal Triangles). In a first wave extension, the wave 2 typically retraces 38%. The Wave 3 is normally 62% of wave 1 and the final fifth wave is typically 38% of the third. That describes this progression quite well. From a wave perspective, the bulls are hoping that were still in Wave 4, and that Copper will witness one more corrective wave higher. From a duration perspective, the Wave (C) should last a little longer. So, this outcome of one more wave higher before (C) completion makes some sense.

3
b

(C)
5
d

(A)

b
a c

(C)
5 1

2 a

(B)

Andys Technical Commentary__________________________________________________________________________________________________

Copper - Weekly (Non-Log) - LONG TERM Support and Resistance

The Bottom Line is that severe technical damage has been done to Copper. The $3.85 area will be strong resistance for any dead cat bounce that might occur after this current bloodshed is over. $4.54 should serve as an important market top for Copper for the next several years. The $2.92 level appears to be decent technical support on the first go -- its the 50% retrace of the entire advance and aligns well with a previous chart support. Bears should, at a minimum, consider closing out short positions in that area. There are no ultimate downside targets for this next phase. Given the wave structure and time cycles, copper is in the beginning of stages of five year cyclical bear market..

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S&P 500 ~ Weekly

REPRINTED from 9/25/2011

Head

Left Shoulder

Right Shoulder
H&S within the larger H&S setup

Andys Technical Commentary__________________________________________________________________________________________________

Copper Weekly
Remember how weve been highlighting the insipient Head and Shoulder pattern on the S&P 500 (previous slide)? Copper, as a barometer of economic health, is sporting a similar look. Interestingly, the neckline support of the S&P 500 comes it at the 50% retracement of the entire advance, the same level as with Copper.

Head

Left Shoulder

Right Shoulder

Andys Technical Commentary__________________________________________________________________________________________________

PLEASE NOTE THAT THERE IS ADDITIONAL INTRA-WEEK AND INTRADAY DISCUSSION ON TECHNICAL ANALYSIS AND TRADING AT TRADERS-ANONYMOUS.BLOGSPOT.COM

Wave Symbology "I" or "A" I or A <I>or <A> -I- or -A(I) or (A) "1 or "a" 1 or a -1- or -a(1) or (a) [1] or [a] [.1] or [.a] = Grand Supercycle = Supercycle = Cycle = Primary = Intermediate = Minor = Minute = Minuette = Sub-minuette = Micro = Sub-Micro

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This report should not be interpreted as investment advice of any kind. This report is technical commentary only. The author is NOT representing himself as a CTA or CFA or Investment/Trading Advisor of any kind. This merely reflects the authors interpretation of technical analysis. The author may or may not trade in the markets discussed. The author may hold positions opposite of what may by inferred by this report. The information contained in this commentary is taken from sources the author believes to be reliable, but it is not guaranteed by the author as to the accuracy or completeness thereof and is sent to you for information purposes only. Commodity trading involves risk and is not for everyone. Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading: Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.